EXHIBIT
10.1


 


LOAN AND NOTE MODIFICATION AGREEMENT


 


THIS LOAN AND NOTE MODIFICATION AGREEMENT (this “Agreement”) is made as
of the 28th day of December, 2009, by and between FIRST
CHESTER COUNTY CORPORATION (the “Borrower”) and GRAYSTONE TOWER BANK (the “Bank”).


 


WITNESSETH:


 


WHEREAS, pursuant to the terms and conditions of a Loan Agreement dated
November 20, 2009 by and between the Borrower and the Bank (the “Loan
Agreement”), a Promissory Note of even date therewith made by the Borrower for
the benefit of the Bank (the “Note”), and various other documents executed by
or on behalf of the Borrower including, without limitation, that certain Stock
Pledge Agreement dated November 20, 2009 (the “Pledge Agreement”)
(together with the Loan Agreement, Note and the Pledge Agreement, the “Loan
Documents”), the Bank extended to the Borrower a non-revolving term loan (the “Loan”)
in the principal amount of $4,000,000.00 (the “Loan Amount”); and


 


WHEREAS, the Borrower and Tower Bancorp, Inc., parent company of
the Bank (“Tower”), are parties to that certain Agreement and Plan of Merger of
even date herewith providing for the merger of the Borrower with and into Tower
(the “Merger Agreement”); and


 


WHEREAS, the Borrower has requested that the Loan Amount be increased
by a maximum of $22,000,000 in order to permit it to contribute such additional
loan proceeds to its primary operating subsidiary, First National Bank of
Chester County (“First National”), solely for purposes of satisfying First
National’s minimum regulatory capital requirements; and


 


WHEREAS, the Bank has agreed to grant such request upon the terms and
conditions provided herein.


 


NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties, intending to be legally bound, agree as follows:


 


1.                                         Loan
Modification.  Upon and
subject to the terms and conditions of this Agreement, the Loan Amount is
hereby increased by up to $22,000,000 such that the Loan Amount shall be
Twenty-six Million Dollars ($26,000,000) or such lesser amount actually
disbursed pursuant to Section 3 hereof. 
In furtherance thereof:


 


(a)           Loan Agreement.  The term “Loan,” as defined in the Loan
Agreement, and any and all references to the “principal amount” of the Loan or
other like terms is hereby amended to mean Twenty-six Million Dollars
($26,000,000) or such lesser amount actually disbursed pursuant to Section 3; provided,
however, that the fee to be paid by the Borrower to the Bank in the event
of an Event of Default, as defined in the Loan Agreement, arising under Section
7.01(e) thereof shall remain at ten percent (10.00%) of the original face
amount of the Note (i.e., $400,000).


 

















 


(b)                                 Note.  The “principal amount” as set forth in the Note
is hereby amended to mean Twenty-six Million Dollars ($26,000,000) or such
lesser amount actually disbursed pursuant to Section 3, and all numeric
references to the principal amount or other like terms shall mean $26,000,000
or such lesser amount actually disbursed pursuant to Section 3, and
interest on the part of the principal amount from time to time remaining
outstanding and unpaid under the Note shall accrue at the rate of six percent
(6.00%) per annum, as reduced from the original twelve percent (12.00%) stated
therein.


 


(c)                                  Pledge Agreement.  The Pledge Agreement is hereby amended such
that the term “Loan,” as defined in the Pledge Agreement, and any and all
references to the “face amount” of the Note secured by the Pledge Agreement or
other like terms shall mean Twenty-six Million Dollars ($26,000,000) or such
lesser amount actually disbursed pursuant to Section 3, and the term “Obligations”
set forth in the Pledge Agreement shall be construed to expressly include the
Borrower’s obligation to repay to the Bank all sums owing under the Note, as
modified hereby.


 


(d)                                 Other Loan Documents.  The other Loan Documents are hereby amended
such that any and all references therein to the principal amount of the Loan
shall mean Twenty-six Million Dollars ($26,000,000) or such lesser amount
actually disbursed pursuant to Section 3.


 


2.                                       Event of Default.  Each of the Loan Documents is hereby amended
to provide that any termination of the Merger Agreement pursuant to Section 8.1
thereof shall immediately constitute an “Event of Default” or “Default” under
each of the Loan Documents, as applicable, including, without limitation, the
Note and Pledge Agreement.


 


3.                                       Disbursement. 
Each of the Loan Documents is hereby amended to provide that the Loan is
to be used solely for purposes of enabling First National to satisfy its
minimum regulatory capital requirements, as established by the Office of the
Comptroller of the Currency (the “OCC”). 
The Borrower shall not request, and the Bank shall have no obligation to
disburse, funds under the Loan Documents in excess of the amount that the Bank
deems, in its sole and absolute discretion after consultation with First
National and the OCC, necessary to satisfy the minimum regulatory capital
requirements of First National (after taking into consideration any other
financing arrangements or other agreements by and between Bank, Borrower or
First National, including, but not limited to, that certain loan participation
agreement to be entered into by and between Bank and First National).


 


4.                                       Exempt Capital Raising Event.  The Bank hereby agrees that the Loan, as
modified hereby, and the use of the additional proceeds thereof by Borrower for
purposes of increasing the regulatory capital of First National, shall not be
deemed a “capital raising event” within the meaning of Section 2.04 of the
Loan Agreement.


 


5.                                       Other Terms.                           Other than the amendments set forth in Sections 1, 2 and 3 of this
Agreement, all other terms and conditions of the Loan Agreement, the Note, the
Pledge Agreement and the other Loan Documents shall remain unchanged and in
full force and effect.


 

















 


6.                                       Warranties and
Representations.    As an
inducement to the Bank to enter into this Agreement, the Borrower makes the
following representations and warranties to the Bank and acknowledges its
justifiable reliance thereon:


 


(a)                                  the Borrower is
not in default under the Loan Agreement, the Note, the Pledge Agreement or any
of the other Loan Documents, and the Borrower is in full compliance with all of
the terms and conditions thereof;


 


(b)                                 no event
exists, or is likely to exist in the future, which with the passage of time,
notice, or both, will constitute a default under the Loan Agreement, the Note,
the Pledge Agreement or any of the other Loan Documents;


 


(c)                                  all warranties
and representations previously made to the Bank by the Borrower remain true,
accurate and complete;


 


(d)                                 there have been
no material adverse changes in the Borrower’s finances or operations which
would cause the Borrower to be in default under any of the financial covenants
contained in the Loan Documents; and


 


(e)                                  all Loan
Documents, as modified and amended herein, are the valid and binding
obligations of the Borrower and are fully enforceable in accordance with their
terms.


 


7.                                       Borrower’s
Deliverables.  As an
inducement to the Bank to enter into this Agreement:


 


(a)                                  the Bank shall
have received on the date hereof from Borrower’s counsel, an opinion, dated the
date hereof, in form and substance satisfactory to the Bank, opining that this
Agreement has been duly and validly authorized, executed and delivered on
behalf of the Borrower, and the Agreement and Loan Documents represent binding
obligations of Borrower enforceable against Borrower in accordance with their
respective terms, as such terms have been modified hereby; and


 


(b)                                 certified
copies of all corporate action taken by the Borrower, including resolutions of
its Board of Directors authorizing the execution, delivery and performance of
this Agreement and the Loan Documents, as amended hereby, together with a
certificate of the Secretary of the Borrower certifying the names and true
signatures of the officers of the Borrower authorized to sign this Agreement.


 


8.                                       No Novation.    The parties hereto do not intend that the
amendment of the Loan Agreement, the Note, the Pledge Agreement or any of the
other Loan Documents as described herein shall create or effect a novation.


 

















 


9.                                       Incorporation.    The terms and conditions of the Loan
Agreement, the Note, the Pledge Agreement and the other Loan Documents are
incorporated by reference and made a part hereof, as if fully set forth
herein.  In the event of any
inconsistencies between this Agreement and any other Loan Document, the terms
and conditions of the other Loan Document shall control, except to the extent
expressly modified in this Agreement. 
Capitalized terms not otherwise defined herein shall have the meanings
attributed thereto in the Loan Agreement.


 


10.                                 Binding
Agreement.  This
Agreement shall be legally binding upon and shall inure to the benefit of the
Borrower and the Bank, and their respective successors and permitted assigns.


 


11.                                 Choice of Law.  This Agreement shall be governed by the laws
of the Commonwealth of Pennsylvania.


 


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.


 


	
   

  	
  FIRST CHESTER COUNTY
  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James M. Deitch

  
	
   

  	
  Name: James M. Deitch

  
	
   

  	
  Title: Chief Operating
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GRAYSTONE TOWER BANK

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Andrew Samuel

  
	
   

  	
  Name: Andrew Samuel

  
	
   

  	
  Title: President